Playing the long game

Commentary by Jenny Tooth OBE, Chief Executive, UK Business Angels Association

Jenny ToothEntrepreneurs are key engines of the UK economy and it is exciting to see the growth achieved by the 1000 fantastic businesses that are showcased in this report.

Angel investment continues to be a major source of finance for the nation’s early-stage entrepreneurs. But Angel investors bring much more than simply finance to help entrepreneurs achieve their growth ambitions. Many investors bring business experience, industry and market knowledge, networks and contacts to support the companies 
they back.

“While there are some funds in the UK with the capacity to offer long-term patient capital, there is much more work to be done”

Angel investment is generally carried out through syndicates of angels, working together to pool their finance, share risks, due diligence and skills, and to support further follow-on rounds.

Angels also frequently co-invest alongside other sources, which creates the opportunity to build deals of significant size, drawing on a range of sources from other angel groups, crowdfunding, venture capital, bank finance and grants, enabling flexible packages of funding to meet the needs of the business.

Nevertheless, with over 65% of early equity funding being focused on London and the Southeast, we are aware that many entrepreneurs from around the UK’s regions are failing to access the capital that they need to build their business. We are therefore connecting with key players across the nation’s regions to increase the number of angel investors in the year ahead, to help build a more vibrant ecosystem for regional entrepreneurs.

“It is vital that we all work together at this time to create a connected finance ecosystem”

A further challenge we face in the UK, and a key priority area for the UK Business Angels Association (UKBAA), is that, while there is strong capacity for financing businesses in the seed and early-growth stages, there is a lack of sufficient capability to support later-stage business growth.

  • 65% - The proportion of early equity funding focused on london and the south east

While there are some funds in the UK with the capacity to offer long-term patient capital, there is much more work to be done. Otherwise the best of the UK’s high-growth companies will seek investment elsewhere to realise their ambitions and the UK economy will lose out.

“Many investors bring business experience, industry and market knowledge, networks and contacts to support the companies they back”

It is vital that we all work together at this time to create a connected finance ecosystem to enable these exciting and inspiring businesses to further their journey to global scale-up success in 2017.